Joann store closures among many Leonard Green and Partners bankruptcies
March 14, 2025
Joann, the fabric and craft store, was one of the many private equity-backed companies to file for bankruptcy in 2024.[1] In February, the company announced it would close all stores and lay off 19,000 employees.[2] The company was owned by Leonard Green and Partners, a private equity firm with a history of aggressive debt practices that have led to the failure of a number of its portfolio companies.[3] Leonard Green and Partners were also behind the January bankruptcy of Prospect Medical Holdings and the December 2024 bankruptcy of The Container Store.[4][5][6]
See PESP 2024 Bankruptcy Tracker
Leonard Green and Partners first acquired Joann in 2010 in a $1.6 billion deal.[7] During the more than a decade that Leonard Green and Partners owned Joann, the private equity firm saddled the company with debt more than it invested in long-term financial success. At the time of their March 2024 bankruptcy, Joann stores reported over one billion dollars in debt.[8] Despite owning the company for over a decade, Leonard Green and Partners were able to exit without being responsible to creditors.[9]
Leonard Green and Partner’s high debt strategy didn’t just result in the bankruptcy of Joann. This harmful strategy can be spotted across its portfolio. In December, another major retailer in the Leonard Green and Partners portfolio, The Container Store, filed for bankruptcy. Leonard Green and Partners have owned The Container Store since 2007.[10]At the time of filing, The Container Store had about $230 million in debt.[11] While there weren’t any layoffs as part of the bankruptcy, the company laid off around 100 workers or about 2.5% of its workforce ahead of the filing in early 2024.[12]
Prospect Medical Holdings, a safety net hospital system with 16 hospitals across California, Connecticut, Pennsylvania, and Rhode Island, filed for bankruptcy in January of this year with over a billion dollars in liabilities.[13]Leonard Green sold its stake in Prospect in 2021, but its actions contributed to the conditions that set the bankruptcy in motion.[14]
Over the course of its ten-year ownership, Leonard Green and Prospect’s minority owners took approximately $658 million in fees and dividends from Prospect in part by saddling it with debt and using the proceeds of the loans to pay themselves.[15] They collected this money out of Prospect even as many of its hospitals suffered deteriorating financial conditions and quality concerns – between FY 2015 and FY 2020, Leonard Green continued to profit while the hospital company took a $603 million cumulative comprehensive loss.[16]
The Container Store and Prospect Medical Holdings are just the latest in a series of high-profile bankruptcies under Leonard Green’s ownership. Leonard Green & Partners exemplifies the high-risk financial strategies commonly employed by private equity firms. The firm’s aggressive debt accumulation and dividend extraction contributed to the closure of other companies it acquired. Leonard Green and Partner’s troubled history in retail includes the bankruptcies of J.Crew, MotorSport Aftermarket Group, and Sports Authority.[17][18][19]
Leonard Green and Partners have engaged in aggressive financial engineering in the healthcare sector, where the effects of closure are even more disastrous. It has extracted substantial debt-funded dividends from Prospect Medical Holdings as well as CHG Healthcare and Aspen Dental.[20] Notably, CHG Healthcare paid Leonard Green a $450 million dividend as recently as July 2024.[21] These debt-fueled dividends are transactions by which private equity firms load debt onto companies they own to give themselves cash payouts. This model needlessly saddles companies with debt to extract capital without making substantive operating improvements, putting those companies at risk for restructuring, bankruptcy, or cost-cutting to make up the interest payments and pay off debt.
Read PESP coverage of Aspen Dental Investigations for Deceptive Practices
Read more about Leonard Green and Partner’s history of dividend payouts
The private equity model prefers short-term profits and rapid value extraction over the long-term stability of the companies in their portfolios. Focusing on immediate financial gains contributes to higher bankruptcy rates among private equity-owned firms. Although private equity accounts for 6.5% of the U.S. economy according to the primary lobby group for the industry, it was responsible for 56% of the largest bankruptcies (those involving liabilities exceeding $500 million at the time of filing) and behind 7 of the 8 largest healthcare bankruptcies in 2024.[22][23] Despite their disproportionate role in fueling bankruptcies, private equity firms often escape the full consequences of business failure.
The Container Store, Joann’s, and Prospect bankruptcies are emblematic of a broader pattern in which private equity firms prioritize short-term financial gains for the firms at the expense of workers and consumers of their portfolio companies. Leonard Green & Partners has an extensive track record of bankruptcies and high debt practices and stands out as a key example of the private equity model. As private equity’s footprint continues to grow, we may see more corporate failures with catastrophic outcomes for workers, consumers, and the economy.
[1]https://pestakeholder.org/reports/private-equity-bankruptcy-tracker/
[2]https://www.forbes.com/sites/pamdanziger/2025/02/26/major-retail-job-losses-at-party-city-joann-este-lauder-starbucks-walmart-kohls-and-more/
[3]https://www.privitas.com/leonard-greens-twice-bankrupt-joann-a-cautionary-tale
[4]https://www.cbsnews.com/news/prospect-medical-holdings-bankruptcy-private-equity/
[5]https://hbsdealer.com/news/leonard-green-partners-completes-purchase-container-store
[6]https://www.cnn.com/2024/12/23/investing/container-store-bankruptcy/index.html
[7]https://www.cleveland.com/business/2010/12/jo-ann_stores_going_private_in.html
[8]https://www.forbes.com/sites/markfaithfull/2024/03/18/joann-hopes-for-fast-track-exit-from-chapter-11-in-pre-pack-deal/
[9]https://www.privitas.com/leonard-greens-twice-bankrupt-joann-a-cautionary-tale
[10]https://www.globest.com/2007/08/20/leonard-green-closes-container-store-deal/?slreturn=20250301-35810
[11]https://www.cnn.com/2024/12/23/investing/container-store-bankruptcy/index.html
[12]https://www.retaildive.com/news/the-container-store-lays-off-hundred-employees-ongoing-sales-declines/708869/
[13] Hospital Locations | Prospect Medical Holdings, Inc.” Accessed October 24, 2023. https://www.pmh.com/locations/hospital-locations/
[14]https://www.healthcaredive.com/news/private-equity-healthcare-senate-report/736826/#:~:text=When%20Leonard%20Green%20sold%20its,due%20to%20outstanding%20rent%20payments.
[15] O’Grady, Eileen. “UPDATE: Leonard Green-Led Ownership Collected $658 Million in Dividends and Fees from Prospect Medical Holdings despite Challenges, Commitment to Regulators to Forgo Dividends.” Private Equity Stakeholder Project, May 2020. https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf
[16] “Decision Re: Initial Application of Chamber Inc.; Ivy Holdings Inc.; Ivy Intermediate Holdings, Inc.; Prospect Medical Holdings, Inc.; Prospect East Holdings, Inc.; Prospect East Hospital Advisory Services, LLC; Prospect CharterCARE, LLC; Prospect CharterCARE SJHSRI, LLC; Prospect CharterCARE RWMC, LLC.” State of Rhode Island Office of the Attorney General, June 1, 2021. https://riag.ri.gov/sites/g/files/xkgbur496/files/documents/Prospect_Chamber_Ivy_AG_HCA_Decision.pdf.
[17]https://pestakeholder.org/news/leonard-green-and-tpg-led-owner-group-collected-765-million-in-fees-and-dividends-from-bankrupt-retailer-j-crew-2/
[18]https://www.wsj.com/articles/motorsport-aftermarket-group-files-for-bankruptcy-1510787398
[19]https://www.nytimes.com/2016/03/03/business/dealbook/sports-authority-bankruptcy-part-of-larger-wave.html
[20]https://pestakeholder.org/news/leonard-green-partners-reaps-repeated-payouts-from-health-care-companies-2/
[21]https://www.moodys.com/research/Moodys-Ratings-says-CHG-Healthcares-ratings-unaffected-by-term-loan-Announcement–PR_493223
[22]https://www.investmentcouncil.org/private-equitys-impact-across-america/#:~:text=Driving%20$1.7%20Trillion%20in%20Economic,of%20GDP%20for%20that%20year
[23]https://pestakeholder.org/reports/private-equity-bankruptcy-tracker/
